Investors are cautious about the AI industry’s circular financing cycle, as Big Tech invests in AI startups that then buy services from the investors. Miramar Capital’s Max Wasserman warns of concentrated risks and the potential impact on market indices if the AI trade falters.

While AI valuations stray from business reality, Broadcom stands out as a grounded option in the chip space. Unlike speculative AI firms, Broadcom’s hardware specialization and high-margin integration have yielded a 51% share increase YTD, outperforming the S&P 500.

As the market shifts in 2026, investors may turn to reliable cash generators like Home Depot and McDonald’s. Defensive stocks like Chevron and Waste Management offer dividends as a sanctuary if the AI bubble bursts. Wasserman advises against overconcentration in technology and suggests diversifying portfolios.

Ultimately, the caution is advised in betting the entire portfolio on AI, as the market may shift towards more traditional sectors. Wasserman highlights the importance of diversification and suggests avoiding overreliance on technology investments.

Read more at Yahoo Finance: Investors should beware of AI’s circular financing trap, look for alternatives like Broadcom